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By Cynical Bear | Thursday 14 September 2017
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
A week after the my last piece on Papillon Holdings (PPHP) in which the silver lining of the RTO being terminated was that the shares could be traded again, bad news hit yesterday with new potential deals being announced meaning that the shares remain suspended and the worse news is that this deal has Longley written all over it….literally. No shame!
At 3.20pm yesterday, Papillon put out two RNS’s; the first was a seemingly meaningless amendment to the final results statement but the second looked much more interesting as it was entitled “Heads of Terms”. It stated that Papillon was:
“…..pleased to announce that it has signed a non-binding Heads of Terms to acquire the entire issued share capital of two companies in a cash and shares deal: Phestor Limited and Greenway Activated Carbon Limited. These companies are focused on ultra-supercapacitor development for energy storage and the development and sale of high quality active carbon production from biomass.”
Great news – two deals for the price of one…..but let’s take a closer look at Companies House.
Phestor Limited, the business focussed on ultra super-capacitor development, was incorporated less than a year ago, has sod all share capital and, until about a month ago, its sole director was, er, a Mr James Longley! He has since been replaced as sole director and shareholder by James Thorpe, an existing business partner of Longley’s in a nascent airline project, Extrajet.
This is shocking stuff and I don’t really know where to start. First, this business is nothing much more than an idea right now and it is an idea of one of the Board directors. Shouldn’t this related party aspect of the deal be disclosed at all? To be fair, the RNS does state that: “Phestor plans to focus on markets….” making it reasonably clear that it is doing nothing much right now with the £1,000 in its bank.
The second deal, Greenway, isn’t much better as this was set up at a similar time with the same amount of capital, namely not much, and is solely owned by James Thorpe; again the RNS states that Greenway plans to do this and that. The only difference is that this doesn’t appear to have been an idea of Longley’s this time.
As a real kick in the teeth for shareholders, as this has happened so quickly, the shares never in fact came back from the last suspension so those locked in here remain so.
What has happened here? I have to consider the possibility that Tatnall and Longley realised that they had to announce a replacement deal quickly so that the shares remained in suspension to avoid a cratering of the share price so Longley just phoned his mate to come to an arrangement. It wouldn’t surprise me if these crackers were lined up to go in to the sister company Fandango Holdings (FHP) but when needs must and all that and one mustn’t give shareholders a chance to exit this lobster pot.
As is usual, these deals are subject to diligence and regulatory process but what that really means is that it is subject to the dream team of Tatnall, Longley and Thorpe convincing various mugs to part with a couple of million quid to fund these pipe-dreams and keep the plc afloat. It almost goes without saying that that isn’t going to be a slam-dunk!
I was actually naïve enough to consider the possibility that my previous pieces might have encouraged Charles Tatnall and James Longley to improve their corporate behaviour but alas no - it’s almost as if they are trying to wind up investors.
Good luck to those who remain adrift on the good ship Papillon, the next rescue boat to pass by may be some time!c
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